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Reform Video Franchising Now

For those who think their cable bills are soaring to all-time highs, it might be reassuring to know that a bipartisan group of U.S. senators agree. At a recent Senate Commerce Committee hearing, members pondered the reasons for the rate hikes.

“There is only head-to-head competition in less than two percent of America,” said Senator Gordon Smith (R-OR). He’s right, and one of the biggest barriers to competition in the cable market is franchising rules — the regulatory system that allows local governments to set the terms and conditions for businesses to enter the video market. As it works now, video providers are required to pay “franchise fees” to their local franchise authority, which is typically a municipality, but can also be a state or a region. Through these fees, the authorities grant the right to “rent” the public right-of-way to video service providers, which must access streets and public spaces to install and maintain programming equipment.

There was a time when cities were regulating what was effectively a monopoly service for local residents, but now that competition is available from a variety of technologies, such as satellite and the Internet, it’s time to revise the regulatory system. The problem is that many cities are unfortunately working to protect franchisees from competitors in exchange for the significant financial and service concessions they get from cable companies.

If Congress acts to remedy this problem, consumers will benefit and the economy will grow as new investment gets injected into video technologies such as Internet Protocol Television (IPTV). It’s encouraging to see that Senators John Ensign, John Kerry, Jim DeMint, John Rockefeller, and John McCain joined with Senator Gordon Smith in calling for reform.